SME Marketing Tips: Thriving in the Downturn
by Willy Lim
SME Marketing Tips: Thriving in the Downturn
With the whole world in the midst of one of the worst economic recession, many large companies in Singapore are cutting back on expenses, or even retrenching their workforce.
However, recession does not necessarily spell doom and gloom for SMEs. In fact history shows that many small and medium-sized businesses not only survive, but go on to thrive during recession. The reason being, small businesses are more nimble than their larger corporate counterparts, and have more options and flexibility to make the necessary change in strategy during an economic downturn.
Here are 3 simple keys for SMEs to increase their net profits during an economic recession.Key #1 Be very clear about which are your profit-generating activities.
No matter what business you are in, what products or services you sell, you are in a "profit-making" business. It costs you to acquire new customers, and you would want to know how each new customer cost you and how much new profit each customer is bringing to your business. A business is really about buying your customers for less than what they spend with you.
Start by asking yourself questions like:"What are my most profitable business activities right now that are likely to remain consistent and keep producing in the current environment?"
Consider in the best case and worst case scenarios, if by doing only the most profitable division of your business, will that be enough to support you?"Are the rest of the activities in other parts of your business producing enough profit to warrant a business to support them?"
Just because you've been in a business or you want to be in a business, is not a good enough reason for the business to exist. If an activity produces below average returns on your investment of time, money, energy, or resources - dump it. Be decisive, don't wait. Being able to react fast is one of the advantages of small businesses over large companies, so use it!"What are my EXACT costs each month and what can I do without?"
Track your expenses down to every cent. Focus your spending on activities that directly bring in revenue and cut down on costs that are frills that you can do without.
Note that while there is a limit to how much you can lower your costs, there is no limit to how much you can increase your revenue, which brings us to Key #2 below.Key #2 Create profits in different ways, by leveraging on your existing assets.
After being very clear about what are your current profit-making activities and exact costs, you can explore generating additional income streams from your existing assets.Diversify your business into other related areas.
For example, if you sell inline skates (product), you may want to add skates rental (service), as an additional income stream. Or if you are really creative, you can offer to do flyers distribution services for interested advertisers using inline skaters!
For example, if you are a Financial Planner, you can probably add an Accounting & Tax business, and a Mortgage Brokering business. This makes sense as you can cross promote these different services to the same clients that require financial planning services.Revisit the way you generate revenue from your products or services.
Explore ways in which you can develop recurring income, put clients on longer term contracts, or get clients to upgrade to a premium version of the product or service. The telcos do this particularly well with their subscription plans and mobile phone upgrade options. Learn from them and apply it to your business.Key #3 Improve your marketing to generate more customers, at a lower cost.
The last key would be to bring more customers to your business through effective marketing. Here are some marketing tips:Know the difference between Drill Bits and Holes.
Has it ever occurred to you, of the millions of people who buy drill bits every year, none of them actually wanted a drill bit?
Yes, what all of them wanted was a hole. The point here is people don't want a product (the drill bit). Rather, they want a solution to their problems (the hole). You have to shift your marketing focus from talking about the features of your product to talking about the benefits your customers can get from your product.Explore alternative low-cost marketing methods.
In addition to traditional marketing medium like newspapers or television, you can also explore low-cost marketing channels such as social media marketing. Social media marketing revolves around the idea of engaging your potential customers through the internet, by posting useful articles on your blog, creating interesting videos and sharing them on YouTube, or networking with people of similar interests on social networking sites like Facebook.
When you build an audience that trust and like you, because you have delivered value through your blog posts, videos and interactions with
them, it is a simple task to market to this audience and get a great response! And the best thing about social media marketing is that, most of the tools needed to do this are either free or very low-cost.Test, measure and improve your marketing efforts.
Always test the effectiveness of different marketing efforts. Put in place a system to keep track of your marketing costs, the response rate and the net profit generated, for all your different marketing channels. Keep the marketing efforts that are giving you a good return on investment and drop those that are not. Only when you keep track and measure, are you able to continually improve your marketing and get the
best return on your marketing budget.
By implementing these 3 simple keys, small businesses will not only survive, but will thrive and pull ahead of competitors. As an old Asian saying goes, "When fate throws a dagger at you, there are only two ways to catch it, either by the blade or by the handle." Learn how to catch the blade by the handle so you can use it well!